Tell HMRC about a new employee

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Check you need to pay someone through PAYE

You usually have to pay your employees through PAYE if they earn £123 or more a week (£533 a month or £6,396 a year).

You do not need to pay self-employed workers through PAYE.

Working out if someone is an employee or self-employed

As a general rule, someone is:

  • employed if they work for you and do not have any of the risks associated with running a business
  • self-employed if they run their own business and are responsible for its success or failure

You must check each worker’s employment status to make sure they’re not self-employed. If you get it wrong you may have to pay extra tax, National Insurance, interest and a penalty.

Temporary or agency workers

You need to operate PAYE on temporary workers that you pay directly, as long as they’re classed as an employee.

You do not need to operate PAYE if a worker is paid by an agency, unless the agency is based abroad and does not have either:

  • a trading address in the UK
  • a representative in the UK

There are special rules for harvest workers or shoot beaters employed for less than 2 weeks.

Employees you only pay once

You operate PAYE differently for employees you only pay once.

Set up a payroll record with their full name and address. If you give them a payroll ID, make sure it’s unique.

When you send your Full Payment Submission (FPS):

  • use tax code ‘0T’ on a ‘Week 1’ or ‘Month 1’ basis
  • put ‘IO’ in the ‘Pay frequency’ field
  • do not put a start or leaving date

Give your employee a statement showing their pay before and after deductions, and the payment date, for example a payslip or a letter. Do not give them a P45.

Volunteers

You do not need to operate PAYE on volunteers if they only get expenses that are not subject to tax or National Insurance - check if their expenses are affected.

Students

Operate PAYE on students in the same way as you do for other employees.

View a printable version of the whole guide

Part of Employ someone: step by step

  1. Step 1 Check your business is ready to employ staff

    1. Prepare your business to take on employees

  2. Step 2 Recruit someone

    You need to advertise the role and interview candidates. You can use a recruitment agency to do this or do it yourself.

    1. Find out about recruiting someone yourself on Acas
    2. Find out about using a recruitment agency

    As an employer you must make sure you recruit employees fairly.

    1. Avoid discrimination during recruitment
    2. Make your application process accessible for employees with disabilities or health conditions

  3. and Check they have the right to work in the UK

    1. Find out how to check an applicant's right to work

  4. and Find out if they need a DBS check

    You may need to check someone's criminal record, for example, if they'll be working in healthcare or with children.

    1. Find out if you need a DBS check
    2. How to do a DBS check

  5. Step 3 Check if they need to be put into a workplace pension

    Check if you need to put your employee into a workplace pension scheme:

  6. Step 4 Agree a contract and salary

    When someone accepts a job offer they have a contract with you as their employer.

    1. Check what the National Minimum Wage is for different ages
    2. Check what the National Minimum Wage is for different types of work
    3. Check what to include in a contract
    4. Agree a written statement of employment particulars

  7. Step 5 Tell HMRC about your new employee

    You must tell HMRC about your new employee on or before their first pay day.

    1. Tell HMRC about a new employee
    2. Get their personal details and P45 to work out their tax code
    3. If you don’t have their P45, use HMRC’s ‘starter checklist’
    4. Check what to do when you start paying your employee